So I think we’re parsing those decisions well. But it’s very much a case-by-case basis.On every credit, we’ve got some guidelines and some principles. We won’t go below this or beyond that, but there are nuances in every situation, what’s the historical relationship with the customer, what’s the prospects for additional business, what’s the deposits, what’s the other ancillary fees, treasury and other services you get with it and we try to factor all those together and make good decisions. And I think our wonderful team of bankers have a good track record of doing that as reflected in our numbers.Stephen Scouten Yeah. Okay. Definitely, George. Appreciate that. And I guess, you guys are transparent as always, which I appreciate in your management commentary here, and if I’m looking at that figure 22, you show the deposit composition and kind of where you are from a broker deposit perspective.How high could that 9.5% go, I guess, within your internal guidance or regulatory or what have you?
Because I’m assuming that the duration of the RESG book is extended in this environment, and maybe I’m wrong, but I would presume that some of these loans would stay on your books a little bit longer than they would have two years ago, which should be a positive to your earnings and capital build, but might put some pressure on deposit gathering and the size of the balance sheet. So just kind of curious how big that could get and what other ways you might fund that unfunded book as it moves over?George Gleason Yes. Good, and good comment, and I’ll sort of take that backwards, and say, yes, RESG is having loans stay on the books longer. Part of that is just there continue to be shortages of certain flavors out there and some materials, particularly HVAC and electronic components building seem to — we have a lot of delays on those sort of things.
And again, it’s just an environment where everything seems to move a little slower than it did pre-COVID.So projects are taking longer and because of the turbulence in the interest rate markets, they’re staying on the books longer and that’s good, and it is a positive and it gives us additional earning assets. So we’re not objecting to that at all. And it’s easy to overstate that. I mean, we’ve already had several loans payoff this quarter. So it’s slow, it’s not stopped. It’s just slower.So your question about brokered deposits. Number one, we have no regulatory limit on how much brokered deposits we could have. Two, our internal limit is broken down into target tolerance buffer and capacity limitations. And the capacity limitation is way beyond where we are now.
We’re sort of in the lower half of the tolerance range for that. So we could increase that if we needed to.As I’ve said on the last call, our sort of working premise is we’ll keep that under 10%. But if we needed that to go higher, it could, but our working premise is that we’ll keep that under 10%. So we’ve got a lot of room to move around on deposits and on the following figure 23 of the slide deck, we give you the fact that we’ve got right at $10 billion of cash unpledged investment securities and FHLB, Fed funds borrowing capacity and lines of credit.The lines of credit do not tap the Fed funds or the Fed discount window is not tapped and that borrowing capacity that we’ve given you there doesn’t include anything for this new bank term funding program, which we don’t have any expectation of using, but it’s survivable out there.
But we didn’t even include it in the calculation, because we don’t expect to use that. As I’ve said earlier, we believe we will fund the growth in our balance sheet this year through our traditional means of organic growth through our 229 branch network and feel pretty good about the prospects of doing that.Stephen Scouten That’s great. Fantastic color, George. Appreciate it. And congrats on all the record results here this quarter.George Gleason All right. Thanks, Stephen.Operator Thank you. One moment for our next question. Our next question comes from the line of Manan Gosalia with Morgan Stanley. Your line is now open.Manan Gosalia Hi. Good morning.George Gleason Good morning, MananManan Gosalia Just given the general concerns around the credit and CRE, I was hoping you could give us some more color on the special mention loan you discussed in the release.
If you can, what drove the potential buyer to withdraw? And why did the sponsor choose to surrender rather than look for another buyer? And I guess, the question for you is if the recent appraised value is above your loan basis, why not sell now, why wait for macro conditions to change?George Gleason Well, Manan, let me answer that, and then part of that, and why not. So now you’re talking about selling a piece of land. It’s a great site. But people who buy pieces of land are a little bit different than people who buy office buildings or apartments or hotels or condo buildings. They’ve got to conceive a project, go out and design, build that project, do all the development work for that. And you don’t typically buy a piece of land until you’re ready to start that process and have some visibility going forward.So the comment was made in one of our research reports that was issued over the night that land deals tend to be more variable in value and tend to be more variable in the marketability than other types of properties, and that was a very good observation.
So the time to sell this and to get our maximum value out of it is probably when conditions stabilize and people are coming back to the market to start incubating new deals and really looking forward to the opportunity to develop it.Buying a piece of land to hold in an environment that has as much economic turbulence as the environment today is not something a lot of people will do, just because there’s uncertainty and there’s holding cost, carry cost, interest cost and so forth with acquiring a track of land. So we think the best strategy is to wait to actively market this property until the Fed’s kind of stopped raising rates and the dust is settling on current economic conditions and people sort of have a view of the future of where they have enough certainty they’re going to go out and incubate on new project on this piece of land.It is a great site, and I will tell you that market in it, we are having some unsolicited inquiries and interest in the site.
But again, our intent is to not actively go out and market the site until economic conditions stabilize at some level.Manan Gosalia Great. And maybe if I can push you a little bit on that just given all the concerns around credit. If the appraised value is dated from December, at what point would you need to re-appraise this or mark this down? What would you need to see for that to happen?George Gleason Well, we probably — certainly we appraise it at least annually and we would re-appraise it otherwise if we felt there was a material likelihood and the change of the value on it. So our policy on OREO properties is to re-appraise those annually. I will tell you when this appraisal was done, our guys in appraisal services pushed pretty hard on the appraiser challenging him on the value and the appraiser was adamant that he could not get to a more conservative value.So it is a reflection of the fact that we’ve got an OREO, I think it’s a reflection of the time, the sponsor had an agreement to sell it.
And when the Signature and Silicon Valley Bank deals unraveled, the buyer backed out of the transaction based on that. So I think if we hadn’t had the economic turbulence, we have this asset would already began.Manan Gosalia Great. I appreciate all the color. And then if I can just follow up with some — I was hoping for some general comments on credit. As you know, investor concerns have ramped up since the bank failures. So the question for you is how much do you share these concerns given your unique vantage point in the CRE market? And maybe if you can talk about how you’re managing ahead of it? Thank you.George Gleason Yeah. Well, we feel very good about our credit position. Our RESG portfolios weighted average 54% loan to cost, 43% loan to value, that gives us a tremendous cushion for values to contract far beyond anything, and I think anybody is talking about in commercial real estate on — that I’ve seen.
So we feel very good about that.We reiterated our guidance that Tim gave in the January call that we expect our net charge-offs this year to range from 6 basis points to 16 basis points for the full year or 14 basis points, and Q1 was in that range. I think that guidance is still good. We feel pretty solid about it or we wouldn’t have reiterated that guidance. There is a lot of chatter out there about commercial real estate.And I would make two points in regard to that. And one point is that our portfolio is new construction and we referenced this in the management comments. These are properties that have the newest state-of-the-art features, the newest amenities and attributes that sponsors are building brand new because it’s what renters or purchasers of those buildings or units are wanting.And as a result, our property tend to be the best, most highly marketable properties in the market.
